Zoe Leigh, co-founder of Chicago Flips Red, said Illinois’ decision not to adopt federal tax breaks for tips and overtime means working families in the state receive less benefit from federal tax relief than residents of other states.
Under federal law, eligible workers can deduct up to $12,500 per individual and $25,000 per couple in tips or overtime for tax years 2025 through 2028.
While several states have adopted these measures, Illinois, along with other deep-blue states like New York, California and Colorado, have not.
“These provisions are designed to benefit people who work longer hours and rely on tips or overtime—not corporations or the wealthy,” Leigh told Chicago City Wire. “By continuing to tax that income while already imposing one of the highest state and local tax burdens in the country, Illinois is choosing to preserve revenue over worker relief. The state could have adopted these changes in a limited or phased way, but instead chose full decoupling, ensuring working families see less benefit from federal tax relief than residents of other states.”
In Illinois, the policy hits 86,200 waiters and waitresses and over 100,000 app-based drivers, including roughly 85,000 in Chicago working for Uber and Lyft, according to the Bureau of Labor Statistics.
It also affects more than 576,000 manufacturing workers as estimated by the Illinois State University Census Data Center, along with anyone who regularly works overtime.
“Work is being punished instead of rewarded,” she said. “When Illinois blocks tax relief on tips and overtime while continuing to raise taxes elsewhere, workers take home less pay for the same or greater effort. Tipped employees lose income they depend on daily, app-based drivers see reduced margins in already volatile work, and manufacturing workers are taxed on overtime that often comes at the cost of time with their families and physical strain. Over time, this discourages extra work, accelerates burnout, and pushes workers to leave Illinois for states with lower tax burdens. The broader consequence is a shrinking workforce, slower economic growth, and increased financial stress on households that are already carrying one of the heaviest tax loads in the country.”
The U.S. Department of the Treasury has also criticized Illinois for blocking key provisions of the One Big Beautiful Bill Act, including “no tax on tips” and “no tax on overtime.”
“This partisan stonewalling is a direct assault on the very families and workers liberal politicians claim to champion,” Bessent said in a press release. “By denying their residents access to these important tax cuts, these governors and legislators are forcing hardworking Americans to shoulder higher state tax burdens, robbing them of the relief they deserve and exacerbating the financial squeeze on low- and middle-income households.”
Since Gov. J.B. Pritzker took office in 2018, per-resident tax collections have increased 44%, from $2,790 to $4,030, far outpacing inflation and leaving Illinoisans paying roughly $1,237 more per person in taxes, according to Illinois Policy.
Illinois Policy also reports the state’s residents now pay the highest combined state and local tax burden in the nation, with median-income households owing about $13,099 in 2025, more than 16.5% of their income and roughly 52% above the national average.
Much of the state’s revenue growth has come from higher tax rates rather than economic expansion, with 49 tax hikes enacted during the Pritzker administration alone.
“Illinois’ tax problem isn’t a lack of revenue—it’s a lack of restraint and accountability,” Leigh said. “When per-capita taxes are up sharply and households are paying over $13,000 a year in state and local taxes, blocking targeted worker relief sends a clear message: the system depends on taxing labor, not reforming government. Over time, this approach drives workers and employers out of the state, shrinking the tax base and worsening the very fiscal challenges policymakers claim to be addressing. Sustainable budgets are built by rewarding work, keeping families in Illinois, and making government live within its means.”
Despite collecting $717 million more than expected in 2025, Illinois continues to raise taxes, including a $482 million increase in the proposed 2026 budget.
Leigh also called for reforms on the spending side.
“That means conducting independent audits of major cost drivers, limiting automatic spending growth, and reallocating resources away from inefficiencies and political patronage,” Leigh said. “Revenue stability should come from economic growth and workforce retention, not from continually extracting more from the same taxpayers.”
She emphasized that the state’s approach not only withholds relief but worsens the overall tax burden.
“Illinois should prioritize targeted, work-based tax relief paired with spending discipline, not across-the-board tax increases,” Leigh said. “That starts with conforming to the federal treatment of tips and overtime so workers immediately keep more of what they earn. If full conformity isn’t feasible, the state could implement capped or phased exemptions for tips and overtime, ensuring relief reaches working families without destabilizing the budget.”
